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HanesBrands Announces Strong Third-Quarter 2021 Results

Company executing Full Potential growth plan; delivers strong revenue growth with operating profit and EPS exceeding guidance

  • Net sales from continuing operations of $1.79 billion, up 6% over prior year, up 18% excluding PPE, driven by strong consumer demand globally
  • Net sales from continuing operations up 11% over third-quarter 2019
  • GAAP EPS from continuing operations of $0.50; adjusted EPS from continuing operations of $0.53
  • Global Champion brand sales increase more than 33% over prior year and 20% over third- quarter 2019
  • U.S. Innerwear sales increase 12% over prior year, excluding PPE, and 25% over third- quarter 2019
  • Company effectively managing macro-environment headwinds from inflation and transportation delays
  • Reiterates Q4 net sales and adjusted operating profit guidance, driven by consumer demand and strong inventory position
  • Full Potential investments help fuel growth; Company remains confident in long-term growth strategy outlined in May
  • For reconciliations of select GAAP and Non-GAAP measures, see Table 6 of this release

HanesBrands Inc. (NYSE: HBI), a global leader in iconic apparel brands, today announced results for the third quarter of 2021, with increased sales, operating profit, earnings per share and operating cash flow driven by strong point-of-sale performance and market share gains in its innerwear and activewear businesses.

“I want to thank our associates for delivering strong results in the quarter, particularly our manufacturing team, which has put us in position to meet consumer demand,” said Chief Executive Officer Steve Bratspies. “We are maintaining our fourth-quarter outlook for net sales and adjusted operating profit, driven by continued demand for our brands, our strong inventory position and our global team’s proven ability to manage ongoing macro challenges.

“We continue to make progress on our Full Potential plan as we invest in our iconic brands, build talent, enhance e-commerce capabilities and modernize our technology. We’re excited by the early results from Full Potential and are confident we can deliver the long-term plan we announced in May.”

Highlights from the quarter, as compared to 2019, include:

  • Strong revenue and profit performance that was in-line with or exceeded the high-end of the Company’s increased guidance ranges despite the unexpected lockdown in Australia that forced the closure of two-thirds of its stores for nearly the entire quarter. Stores in Australia are re-opening as the lockdowns are lifted.
  • Global Champion brand sales increased 20% with balanced growth between the U.S. and International. Performance was driven by strong consumer demand across channels in the U.S., continued growth in Europe and the ramp-up of partners in China.
  • U.S. Innerwear sales increased 25% due to the combination of strong consumer demand across the Company’s brand portfolio, which drove point-of-sale growth and increased market share gains, as well as the impact from pent-up consumer demand that is fueling category growth rates above historical levels. Performance in the quarter was driven by momentum in shapewear and innovation in bras and men’s underwear.
  • Consistent with the Company’s Full Potential plan to build its iconic brands, global media and marketing investment increased $25 million, helping drive higher point-of-sale trends and increased market share. These investments have improved Champion’s global brand awareness and consideration of the Company’s U.S. brands.
  • Full Potential plan improvements in core e-commerce capabilities delivered higher conversion rates and average order values. Total online sales grew 62%, including 50% growth on Company-owned websites. The strong online performance, both domestic and international, was driven by consumer demand for the Company’s brands across its owned websites, pure-plays and retailer-owned websites.

Third-Quarter 2021 Results

Net sales from continuing operations for the third quarter ended October 2, 2021 totaled $1.79 billion, an increase of $98 million, or 6%, including 33% growth in Champion brand sales globally. This compared with $1.69 billion for the quarter ended September 26, 2020, which included $179 million in sales of personal protective equipment (“PPE”) in response to the COVID-19 pandemic. Excluding PPE, net sales increased $276 million, or 18%, over prior year. The year-over-year growth was driven by strong consumer demand and point-of-sale trends in the U.S., Europe, Americas and certain Asia markets, including China, which more than offset headwinds from the extended government COVID-related lockdowns in Australia and Japan. Total constant currency third-quarter net sales increased 5%.

Due to the significant impact of the pandemic on prior year results, this release includes certain comparisons to the comparable 2019 periods for additional context. All 2019 results are rebased to reflect the European Innerwear business as discontinued operations as well as the exit of the C9 Champion mass program and the DKNY intimate apparel license.

Compared to third-quarter 2019, net sales from continuing operations increased $179 million, or 11%, including 20% growth in Champion brand sales globally. Total constant currency net sales increased 10%. Growth in the global innerwear and activewear businesses was driven by strong consumer demand, higher point-of-sale performance and market share gains.

For the third-quarter 2021, GAAP gross margin of 39.1% increased 530 basis points compared to prior year and 170 basis points compared to third-quarter 2019. Adjusted gross margin of 39.1% increased 250 basis points over last year and approximately 65 basis points over 2019. The margin expansion in both periods was driven by cost savings programs in the supply chain and the benefits from business mix, which more than offset higher transportation and inflation costs.

Third-quarter GAAP operating profit increased 24% to $235 million compared to prior year and decreased 10% compared to third-quarter 2019. GAAP operating margin of 13.1% increased 190 basis points compared to prior year and decreased 200 basis points compared to third quarter 2019.

Adjusted operating profit of $264 million increased $22 million, or 9%, compared to prior year and $20 million, or 8% compared to 2019. Adjusted operating margin of 14.7% increased approximately 50 basis points compared to last year as the gross margin benefits more than offset increased brand marketing investments and higher levels of inflation in distribution costs. As compared to third-quarter 2019, adjusted operating margin decreased approximately 40 basis points as higher brand marketing investments and higher levels of inflation more than offset the gross margin benefits.

The GAAP and adjusted effective tax rates for the third quarter were 7.9% and 15.0%, respectively, which compare to GAAP and adjusted effective tax rates of 16.0% and 17.1%, respectively, for the third quarter of 2020. For the third quarter of 2019, GAAP and adjusted effective tax rates were 10.5% and 10.2%, respectively.

On a GAAP basis, third-quarter income from continuing operations totaled $177 million, or $0.50 per diluted share. This compares to income from continuing operations of $118 million, or $0.34 per diluted share in the prior year period, and income from continuing operations of $189 million, or $0.52 per diluted share in third-quarter 2019.

Adjusted income from continuing operations totaled $188 million, or $0.53 per diluted share. This compares to adjusted income from continuing operations of $160 million, or $0.46 per diluted share, in the prior year period and adjusted income from continuing operations of $174 million, or $0.48 per diluted share, in third-quarter 2019.

(See the Note on Adjusted Measures and Reconciliation to GAAP Measures later in this news release for additional discussion and details of actions, which include pandemic-related and Full Potential plan charges.)

Third-Quarter 2021 Business Segment Summaries

Innerwear (vs 2020) Sales decreased $90 million, or 11% due to the overlap of last year’s $166 million of PPE sales. Men’s, Kids and Socks revenue increased mid-to-high single digits while Women’s revenue increased approximately 20%. Excluding PPE, Innerwear sales increased 12% over last year with strong point-of-sale growth across channels. Operating margin of 21.0% decreased 70 basis points compared to prior year due to fixed cost de-leverage from lower sales, higher transportation costs, increased investments in brand marketing and higher levels of inflation.

(vs 2019) Sales increased $140 million, or 25%, compared to third-quarter 2019, with double-digit growth in the Kids, Socks, Women’s and Men’s businesses. The growth was driven by the combination of strong consumer demand across the Company’s brand portfolio, which drove point-of-sale growth and increased market share gains, as well as the impact from pent-up consumer demand that is fueling category growth rates above historical levels. Year-to-date, the Company’s U.S. innerwear market share has increased approximately 140 basis points over 2019 with increased share positions in Men’s, Women’s, Kids and Socks. Operating margin in the quarter expanded approximately 10 basis points to 21.0% as the benefits from volume leverage and business mix essentially offset increased investments in brand marketing as well as higher inflation costs.

Activewear (vs 2020) Activewear sales grew $138 million, or 42% over prior year driven by strong double-digit growth in both the Champion and Hanes brands. The Company experienced strong point-of- sale trends across several channels in the quarter. The segment continued to benefit from pent-up consumer demand and the overlap of last year’s COVID-related headwinds. Segment operating margin of 16.5% increased approximately 740 basis points over prior period driven by fixed-cost leverage from higher sales and the benefits from business mix, which more than offset higher brand marketing investment.

(vs 2019) Activewear revenue increased $17 million, or 4%. Champion brand sales within the segment increased 14%, which more than offset declines in other brands. The Company experienced strong point-of-sale trends across the online, wholesale and distributor channels in the quarter, which was partially offset by declines in the college bookstore channel. Activewear’s operating margin decreased approximately 10 basis points compared to third-quarter 2019 as leverage from higher sales volume and benefits from business mix were essentially offset by increased investments in brand marketing.

International (vs 2020) International segment revenue increased $30 million, or 6%, compared to prior year. Excluding $13 million of PPE sales in the prior year quarter, third-quarter sales increased 9% on a reported basis and 7% on a constant currency basis. Constant currency sales grew in the Americas, Europe and China driven by strong consumer demand for the Company’s brands and the overlap of last year’s COVID-related headwinds. Constant currency sales declined in Japan and were consistent with prior year in Australia as both countries were impacted by government-mandated store closings due to the ongoing pandemic. For the quarter, the International segment’s operating margin of 16.1% decreased 385 basis points over prior year driven by de-leverage in the Japan and Australia businesses as well as increased brand marketing investment.

(vs 2019) International segment revenue increased $23 million, or more than 4%, compared to third- quarter 2019. On a constant currency basis, sales increased more than 1% with strong growth in Europe, the Americas and parts of Asia offsetting COVID-related headwinds in Japan and Australia. For the quarter, the International segment’s operating margin decreased 240 basis points compared to third-quarter 2019 driven by increased brand marketing investments as well as de-leverage in Japan and Australia.

Refinancing of Senior Secured Credit Facility and Retirement of 2025 Senior Notes

  • The Company intends to refinance its Senior Secured Credit Facility in the fourth quarter of 2021, subject to market conditions.
  • In conjunction with the refinancing, the Company intends to redeem its $700 million 5.375% 2025 Senior Notes using proceeds from the transaction and cash on hand.
  • The make-whole premium to redeem the 5.375% 2025 Senior Notes and transaction fees are estimated to result in a one-time charge of approximately $45 million, which is reflected in the Company’s fourth-quarter and full-year 2021 guidance ranges.
  • The Company estimates this transaction will result in approximately $35 million of annual savings in interest and other expense, with approximately $4 million recognized in the fourth-quarter 2021. The expected interest and other expense savings is reflected in the Company’s fourth-quarter and full-year 2021 guidance ranges.

European Innerwear Divestiture Update

A key pillar of the Full Potential plan is focusing HanesBrands’ portfolio to enable the Company to invest in the areas with the greatest potential for growth. As part of this plan, the Company previously announced its intention to sell its European Innerwear business. The Company has reached an agreement to sell this business to an affiliate of Regent, L.P., pending the completion of consultation with the European and French works councils representing employees of the European Innerwear business and customary closing conditions. Under the agreement, the purchaser will receive all the assets and operating liabilities of the European Innerwear business for a purchase price of one Euro. The transaction is expected to close in the first quarter of 2022.

“Focusing our portfolio is crucial to our long-term growth and selling our European Innerwear business represents a significant step forward in our Full Potential plan,” Bratspies said. “Our European Innerwear business has strong brands and great people, and this transaction helps position them for long-term success. I want to thank our European Innerwear associates for their commitment and all they have done for the Company over the years.”

Fourth-Quarter and Full-Year 2021 Financial Outlook

The following financial outlook is based on current market conditions and judgments of management and is subject to risks and uncertainties that may cause actual results to differ materially, many of which are further discussed in the Company’s most recent annual report on Form 10-K available at www.sec.gov and in the investors section of the Company’s website at www.Hanes.com/Investors.

For fourth-quarter 2021, which ends on January 1, 2022, the Company currently expects:

  • Net sales from continuing operations of approximately $1.71 billion to $1.78 billion, which represents approximately 3% growth over prior year at the midpoint and includes a projected benefit of approximately $6 million from changes in foreign currency exchange rates. This compares to net sales of $1.69 billion in fourth-quarter 2020, which included $28 million in PPE sales and approximately $45 million from the 53rd week.
  • Adjusting for PPE and the 53rd week in 2020, net sales at the midpoint of the guidance range are expected to increase 8% over the prior year period.
  • As compared to rebased fourth-quarter 2019, net sales at the midpoint are expected to increase 15%.
  • GAAP operating profit from continuing operations to range from approximately $182 million to $202 million.
  • Adjusted operating profit from continuing operations to range from approximately $200 million to $220 million. The midpoint of adjusted operating profit represents an operating margin of approximately 12.0% and reflects the impact of cost inflation as well as increased brand investment.
  • Charges for actions related to Full Potential of approximately $18 million.
  • Interest and other expenses of approximately $40 million, which excludes an approximate $45 million charge related to the expected refinancing of the Company’s Senior Secured Credit Facility and the make-whole premium for the planned redemption of its $700 million 5.375% 2025 Senior Notes.
  • An effective tax rate of approximately 12% on both a GAAP and adjusted basis.
  • GAAP earnings per share from continuing operations to range from approximately $0.24 to $0.29.
  • Adjusted earnings per share from continuing operations to range from approximately $0.40 to $0.45.

For fiscal-year 2021, which ends on January 1, 2022, the Company currently expects:

  • Net sales from continuing operations to total approximately $6.76 billion to $6.83 billion, which represents approximately 11% growth over prior year at the midpoint and includes a projected benefit of approximately $108 million from changes in foreign currency exchange rates. This compares to net sales of $6.13 billion in 2020, which included $820 million in sales of PPE and approximately $45 million from the 53rd week.
  • Adjusting for PPE and the 53rd week in 2020, net sales at the midpoint of the guidance range are expected to increase 29% over the prior year period.
  • As compared to rebased 2019, net sales at the midpoint are expected to increase 13%.
  • GAAP operating profit from continuing operations to range from approximately $825 million to $845 million.
  • Adjusted operating profit from continuing operations to range from approximately $910 million to $930 million. The midpoint of adjusted operating profit represents approximately 18% growth compared to prior year and 12% growth compared to 2019. The midpoint of adjusted operating profit guidance range represents an operating margin of 13.5%.
  • Full-year outlook reflects higher levels of cost inflation as compared to 2020 and 2019.
  • Incremental brand marketing investment of more than $50 million as compared to 2020.
  • Charges for actions related to Full Potential of approximately $85 million.
  • Interest and other expenses of approximately $175 million, which excludes an approximate $45 million charge related to the expected refinancing of the Company’s Senior Secured Credit Facility and the make-whole premium for the planned redemption of its $700 million 5.375% 2025 Senior Notes.
  • An effective tax rate of approximately 11% on a GAAP basis and approximately 14% on an adjusted basis.
  • GAAP earnings per share from continuing operations to range from approximately $1.53 to $1.58.
  • Adjusted earnings per share from continuing operations to range from approximately $1.79 to $1.84.
  • Cash flow from operations of approximately $550 million to $600 million.
  • Capital expenditures of approximately $75 million to $85 million.

HanesBrands has updated its quarterly frequently-asked-questions document, which is available at www.Hanes.com/FAQ.

Note on Adjusted Measures and Reconciliation to GAAP Measures

To supplement financial results prepared in accordance with generally accepted accounting principles, the Company provides quarterly and full-year results concerning certain non‐GAAP financial measures, including adjusted EPS from continuing operations, adjusted income from continuing operations, adjusted income tax expense, adjusted income from continuing operations before income tax expense, adjusted operating profit (and margin), adjusted SG&A, adjusted gross profit (and margin), EBITDA and adjusted EBITDA.

Adjusted EPS from continuing operations is defined as diluted EPS from continuing operations excluding actions and the tax effect on actions. Adjusted income from continuing operations is defined as income from continuing operations excluding actions and the tax effect on actions. Adjusted income tax expense is defined as income tax expense excluding actions. Adjusted income from continuing operations before income tax is defined as income from continuing operations before income tax excluding actions. Adjusted operating profit is defined as operating profit excluding actions. Adjusted SG&A is defined as selling, general and administrative expenses excluding actions. Adjusted gross profit is defined as gross profit excluding actions.

Charges for actions taken in 2021 include professional fees, operating model charges and intangible asset impairment charges related to our Full Potential plan. While these costs are not operational in nature and are not expected to continue for any singular transaction on an ongoing basis, similar types of costs, expenses and charges have occurred in prior periods and may recur in future periods depending upon future business plans and circumstances.

Charges for actions taken in 2020 include supply chain restructuring actions, program exit costs, COVID-19 related charges, Full Potential plan charges and the write-off of a discrete tax asset related to our Bras N Things acquisition. COVID-19 related charges include intangible asset and goodwill impairment charges, bad debt expense and supply chain re-startup costs. Full Potential plan charges for 2020 include inventory write-down charges related to our SKU reduction initiative and discontinuation of our PPE business.

Charges for actions taken in 2019 primarily represented supply chain network changes, program exit costs, and overhead reduction as well as completion of outstanding acquisition integration.

HanesBrands has chosen to present these non‐GAAP measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating operations absent the effect of the Full Potential plan and other actions, as well as the COVID-19 pandemic. HanesBrands believes these non-GAAP measures provide management and investors with valuable supplemental information for analyzing the operating performance of the Company’s ongoing business during each period presented without giving effect to costs associated with the execution of any of the aforementioned actions taken.

The Company has also chosen to present EBITDA and adjusted EBITDA to investors because it considers these measures to be an important supplemental means of evaluating operating performance. EBITDA is defined as income from continuing operations before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding actions and stock compensation expense. HanesBrands believes that EBITDA and adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry, and management uses EBITDA and adjusted EBITDA for planning purposes in connection with setting its capital allocation strategy. EBITDA and adjusted EBITDA should not, however, be considered as measures of discretionary cash available to invest in the growth of the business.

In addition, the Company has chosen to present certain year-over-year comparisons with respect to the Company’s rebased 2019 business, which excludes the exited C9 Champion mass program and DKNY intimate apparel license. HanesBrands believes this information is useful to management and investors to facilitate a more meaningful comparison of the results of the Company’s ongoing business.

HanesBrands is a global company that reports financial information in U.S. dollars in accordance with GAAP. As a supplement to the Company’s reported operating results, HanesBrands also presents constant-currency financial information, which is a non-GAAP financial measure that excludes the impact of translating foreign currencies into U.S. dollars. The Company uses constant-currency information to provide a framework to assess how the business performed excluding the effects of changes in the rates used to calculate foreign currency translation.

To calculate foreign currency translation on a constant currency basis, operating results for the current-year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period).

HanesBrands believes constant-currency information is useful to management and investors to facilitate comparison of operating results and better identify trends in the Company’s businesses.

Non‐GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as an alternative to, or substitute for, financial results prepared in accordance with GAAP. Further, the non-GAAP measures presented may be different from non-GAAP measures with similar or identical names presented by other companies.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are presented in the supplemental financial information included with this news release.

Cautionary Statement Concerning Forward-Looking Statements

This news release contains certain forward-looking statements, as defined under U.S. federal securities laws, with respect to our long-term goals and trends associated with our business, as well as guidance as to future performance. In particular, among others, statements regarding the potential impact of the COVID-19 pandemic on our business and financial performance; guidance and predictions regarding expected operating results, including related to our Full Potential plan; statements made in the Fourth Quarter and Full-year 2021 Financial Outlook section of this news release; and statements regarding the anticipated refinancing of our Senior Secured Credit Facility and sale of our European Innerwear business, are forward-looking statements. These forward-looking statements are based on our current intent, beliefs, plans and expectations. Readers are cautioned not to place any undue reliance on any forward-looking statements. Forward-looking statements necessarily involve risks and uncertainties, many of which are outside of our control, that could cause actual results to differ materially from such statements and from our historical results and experience. These risks and uncertainties include such things as: our ability to successfully execute our Full Potential plan to achieve the desired results; the potential effects of the COVID-19 pandemic, including on consumer spending, global supply chains and the financial markets; the highly competitive and evolving nature of the industry in which we compete; the rapidly changing retail environment; our reliance on a relatively small number of customers for a significant portion of our sales; any inadequacy, interruption, integration failure or security failure with respect to our information technology; the impact of significant fluctuations and volatility in various input costs, such as cotton and oil-related materials, utilities, freight and wages; our ability to attract and retain a senior management team with the core competencies needed to support growth in global markets; significant fluctuations in foreign exchange rates; legal, regulatory, political and economic risks related to our international operations; our ability to effectively manage our complex multinational tax structure; and other risks identified from time to time in our most recent Securities and Exchange Commission reports, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Since it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, the above list should not be considered a complete list. Any forward-looking statement speaks only as of the date on which such statement is made, and HanesBrands undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, other than as required by law.

HanesBrands

HanesBrands (NYSE: HBI) makes everyday apparel that is known and loved by consumers around the world for comfort, quality and value. Among the Company’s iconic brands are Hanes, the leading basic apparel brand in the United States; Champion, an innovator at the intersection of lifestyle and athletic apparel; and Bonds, which is setting new standards for design and sustainability. HBI employs 61,000 associates in 47 countries and has built a strong reputation for workplace quality and ethical business practices. The Company, a longtime leader in sustainability, launched aggressive 2030 goals to improve the lives of people, protect the planet and produce sustainable products. HBI is building on its unmatched strengths to unlock its #FullPotential and deliver long-term growth that benefits all of its stakeholders.

TABLE 1

HANESBRANDS INC.

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(Unaudited)

 

 

Quarters Ended

 

 

 

Nine Months Ended

 

 

 

October 2,

2021

 

September 26,

2020

 

% Change

 

October 2,

2021

 

September 26,

2020

 

% Change

Net sales

$

1,789,551

 

 

$

1,691,863

 

 

5.8

%

 

$

5,048,891

 

 

$

4,438,016

 

 

13.8

%

Cost of sales

1,089,890

 

 

1,120,392

 

 

 

 

3,064,920

 

 

2,934,515

 

 

 

Gross profit

699,661

 

 

571,471

 

 

22.4

%

 

1,983,971

 

 

1,503,501

 

 

32.0

%

As a % of net sales

39.1

%

 

33.8

%

 

 

 

39.3

%

 

33.9

%

 

 

Selling, general and administrative expenses

465,015

 

 

382,384

 

 

 

 

1,341,809

 

 

1,064,328

 

 

 

As a % of net sales

26.0

%

 

22.6

%

 

 

 

26.6

%

 

24.0

%

 

 

Operating profit

234,646

 

 

189,087

 

 

24.1

%

 

642,162

 

 

439,173

 

 

46.2

%

As a % of net sales

13.1

%

 

11.2

%

 

 

 

12.7

%

 

9.9

%

 

 

Other expenses

1,811

 

 

4,898

 

 

 

 

6,227

 

 

15,652

 

 

 

Interest expense, net

40,860

 

 

43,500

 

 

 

 

127,760

 

 

120,602

 

 

 

Income from continuing operations before income tax expense

191,975

 

 

140,689

 

 

 

 

508,175

 

 

302,919

 

 

 

Income tax expense

15,228

 

 

22,464

 

 

 

 

55,161

 

 

43,008

 

 

 

Income from continuing operations

176,747

 

 

118,225

 

 

49.5

%

 

453,014

 

 

259,911

 

 

74.3

%

Loss from discontinued operations, net of tax

(24,970

)

 

(14,947

)

 

 

 

(435,823

)

 

(3,326

)

 

 

Net income

$

151,777

 

 

$

103,278

 

 

 

 

$

17,191

 

 

$

256,585

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - basic:

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

$

0.50

 

 

$

0.34

 

 

 

 

$

1.29

 

 

$

0.74

 

 

 

Discontinued operations

(0.07

)

 

(0.04

)

 

 

 

(1.24

)

 

(0.01

)

 

 

Net income

$

0.43

 

 

$

0.29

 

 

 

 

$

0.05

 

 

$

0.73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - diluted:

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

$

0.50

 

 

$

0.34

 

 

 

 

$

1.29

 

 

$

0.73

 

 

 

Discontinued operations

(0.07

)

 

(0.04

)

 

 

 

(1.24

)

 

(0.01

)

 

 

Net income

$

0.43

 

 

$

0.29

 

 

 

 

$

0.05

 

 

$

0.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

351,071

 

 

350,703

 

 

 

 

351,020

 

 

353,419

 

 

 

Diluted

352,251

 

 

351,604

 

 

 

 

351,996

 

 

353,956

 

 

 

 

TABLE 2-A

HANESBRANDS INC.

Supplemental Financial Information

Impact of Foreign Currency

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended October 2, 2021

 

 

 

 

 

 

 

As

Reported

 

Impact from

Foreign Currency1

 

Constant

Currency

 

Quarter

Ended

September 26,

2020

 

% Change,

As Reported

 

% Change,

Constant

Currency

As reported under GAAP:

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

1,789,551

 

 

$

8,446

 

 

$

1,781,105

 

 

$

1,691,863

 

 

5.8

%

 

5.3

%

Gross profit

699,661

 

 

4,169

 

 

695,492

 

 

571,471

 

 

22.4

 

 

21.7

 

Operating profit

234,646

 

 

1,276

 

 

233,370

 

 

189,087

 

 

24.1

 

 

23.4

 

Diluted earnings per share from continuing operations

$

0.50

 

 

$

0.00

 

 

$

0.50

 

 

$

0.34

 

 

47.1

%

 

47.1

%

 

 

 

 

 

 

 

 

 

 

 

 

As adjusted:2

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

1,789,551

 

 

$

8,446

 

 

$

1,781,105

 

 

$

1,691,863

 

 

5.8

%

 

5.3

%

Gross profit

699,553

 

 

4,169

 

 

695,384

 

 

619,070

 

 

13.0

 

 

12.3

 

Operating profit

263,742

 

 

1,276

 

 

262,466

 

 

241,344

 

 

9.3

 

 

8.8

 

Diluted earnings per share from continuing operations

$

0.53

 

 

$

0.00

 

 

$

0.53

 

 

$

0.46

 

 

15.2

%

 

15.2

%

 

Nine Months Ended October 2, 2021

 

 

 

 

 

 

 

As

Reported

 

Impact from

Foreign Currency1

 

Constant

Currency

 

Nine Months

Ended

September 26,

2020

 

% Change,

As Reported

 

% Change,

Constant

Currency

As reported under GAAP:

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

5,048,891

 

 

$

102,217

 

 

$

4,946,674

 

 

$

4,438,016

 

 

13.8

%

 

11.5

%

Gross profit

1,983,971

 

 

55,584

 

 

1,928,387

 

 

1,503,501

 

 

32.0

 

 

28.3

 

Operating profit

642,162

 

 

17,228

 

 

624,934

 

 

439,173

 

 

46.2

 

 

42.3

 

Diluted earnings per share from continuing operations

$

1.29

 

 

$

0.04

 

 

$

1.24

 

 

$

0.73

 

 

76.7

%

 

69.9

%

 

 

 

 

 

 

 

 

 

 

 

 

As adjusted:2

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

5,048,891

 

 

$

102,217

 

 

$

4,946,674

 

 

$

4,438,016

 

 

13.8

%

 

11.5

%

Gross profit

1,988,570

 

 

55,584

 

 

1,932,986

 

 

1,591,329

 

 

25.0

 

 

21.5

 

Operating profit

709,315

 

 

17,228

 

 

692,087

 

 

548,033

 

 

29.4

 

 

26.3

 

Diluted earnings per share from continuing operations

$

1.39

 

 

$

0.04

 

 

$

1.35

 

 

$

0.98

 

 

41.8

%

 

37.8

%

1

Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results.

2

Results for the quarters and nine months ended October 2, 2021 and September 26, 2020 reflect adjustments for restructuring and other action-related charges. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Tables 6-A through 6-E.

 

TABLE 2-B

HANESBRANDS INC.

Supplemental Financial Information

Impact of Foreign Currency

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended October 2, 2021

 

 

 

 

 

 

 

As

Reported

 

Impact from

Foreign Currency1

 

Constant

Currency

 

Quarter

Ended

September 28,

2019

 

% Change,

As Reported

 

% Change,

Constant

Currency

As reported under GAAP:

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

1,789,551

 

 

$

16,060

 

 

$

1,773,491

 

 

$

1,729,308

 

 

3.5

%

 

2.6

%

Gross profit

699,661

 

 

8,678

 

 

690,983

 

 

646,469

 

 

8.2

 

 

6.9

 

Operating profit

234,646

 

 

2,212

 

 

232,434

 

 

261,178

 

 

(10.2

)

 

(11.0

)

Diluted earnings per share from continuing operations

$

0.50

 

 

$

0.01

 

 

$

0.50

 

 

$

0.52

 

 

(3.8

)%

 

(3.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

As adjusted:2

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

1,789,551

 

 

$

16,060

 

 

$

1,773,491

 

 

$

1,610,610

 

 

11.1

%

 

10.1

%

Gross profit

699,553

 

 

8,678

 

 

690,875

 

 

619,487

 

 

12.9

 

 

11.5

 

Operating profit

263,742

 

 

2,212

 

 

261,530

 

 

243,749

 

 

8.2

 

 

7.3

 

Diluted earnings per share from continuing operations

$

0.53

 

 

$

0.01

 

 

$

0.53

 

 

$

0.48

 

 

10.4

%

 

10.4

%

 

Nine Months Ended October 2, 2021

 

 

 

 

 

 

 

As

Reported

 

Impact from

Foreign Currency1

 

Constant

Currency

 

Nine Months

Ended

September 28,

2019

 

% Change,

As Reported

 

% Change,

Constant

Currency

As reported under GAAP:

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

5,048,891

 

 

$

64,893

 

 

$

4,983,998

 

 

$

4,815,704

 

 

4.8

%

 

3.5

%

Gross profit

1,983,971

 

 

35,968

 

 

1,948,003

 

 

1,795,573

 

 

10.5

 

 

8.5

 

Operating profit

642,162

 

 

10,799

 

 

631,363

 

 

620,679

 

 

3.5

 

 

1.7

 

Diluted earnings per share from continuing operations

$

1.29

 

 

$

0.03

 

 

$

1.26

 

 

$

1.13

 

 

14.2

%

 

11.5

%

 

 

 

 

 

 

 

 

 

 

 

 

As adjusted:2

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

5,048,891

 

 

$

64,893

 

 

$

4,983,998

 

 

$

4,484,192

 

 

12.6

%

 

11.1

%

Gross profit

1,988,570

 

 

35,968

 

 

1,952,602

 

 

1,733,436

 

 

14.7

 

 

12.6

 

Operating profit

709,315

 

 

10,799

 

 

698,516

 

 

590,475

 

 

20.1

 

 

18.3

 

Diluted earnings per share from continuing operations

$

1.39

 

 

$

0.03

 

 

$

1.36

 

 

$

1.06

 

 

31.1

%

 

28.3

%

1

Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results.

2

Results for the quarters and nine months ended October 2, 2021 and September 28, 2019 reflect adjustments for restructuring and other action-related charges. Results for the quarter and nine months ended September 28, 2019 also reflect adjustments for the exited C9 Champion mass program and DKNY intimate apparel license. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Tables 6-A through 6-E.

 

TABLE 3-A

HANESBRANDS INC.

Supplemental Financial Information

By Business Segment

(in thousands)

(Unaudited)

 

 

Quarters Ended

 

 

 

Nine Months Ended

 

 

 

October 2,

2021

 

September 26,

2020

 

% Change

 

October 2,

2021

 

September 26,

2020

 

% Change

Segment net sales:

 

 

 

 

 

 

 

 

 

 

 

Innerwear1

$

702,617

 

 

 

$

792,600

 

 

 

(11.4

)%

 

$

2,053,702

 

 

 

$

2,309,816

 

 

 

(11.1

)%

Activewear

462,499

 

 

 

324,921

 

 

 

42.3

 

 

1,230,691

 

 

 

781,300

 

 

 

57.5

 

International2

536,483

 

 

 

506,203

 

 

 

6.0

 

 

1,521,667

 

 

 

1,185,718

 

 

 

28.3

 

Other

87,952

 

 

 

68,139

 

 

 

29.1

 

 

242,831

 

 

 

161,182

 

 

 

50.7

 

Total net sales

$

1,789,551

 

 

 

$

1,691,863

 

 

 

5.8

%

 

$

5,048,891

 

 

 

$

4,438,016

 

 

 

13.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit:

 

 

 

 

 

 

 

 

 

 

 

Innerwear

$

147,651

 

 

 

$

172,000

 

 

 

(14.2

)%

 

$

461,237

 

 

 

$

558,075

 

 

 

(17.4

)%

Activewear

76,172

 

 

 

29,568

 

 

 

157.6

 

 

177,813

 

 

 

31,925

 

 

 

457.0

 

International

86,371

 

 

 

101,029

 

 

 

(14.5

)

 

235,451

 

 

 

156,936

 

 

 

50.0

 

Other

11,288

 

 

 

3,059

 

 

 

269.0

 

 

22,394

 

 

 

(12,263

)

 

 

NM

General corporate expenses/other

(57,740

)

 

 

(64,312

)

 

 

(10.2

)

 

(187,580

)

 

 

(186,640

)

 

 

0.5

 

Total operating profit before restructuring and other action-related charges

263,742

 

 

 

241,344

 

 

 

9.3

 

 

709,315

 

 

 

548,033

 

 

 

29.4

 

Restructuring and other action-related charges

(29,096

)

 

 

(52,257

)

 

 

(44.3

)

 

(67,153

)

 

 

(108,860

)

 

 

(38.3

)

Total operating profit

$

234,646

 

 

 

$

189,087

 

 

 

24.1

%

 

$

642,162

 

 

 

$

439,173

 

 

 

46.2

%

1

The Innerwear segment includes $166 million and $779 million of net sales of personal protective equipment in the third quarter and nine months of 2020, respectively.

2

The International segment includes $13 million of net sales of personal protective equipment in the third quarter and nine months of 2020.

 

 

Quarters Ended

 

 

 

Nine Months Ended

 

 

 

October 2,

2021

 

September 26,

2020

 

Basis

Points Change

 

October 2,

2021

 

September 26,

2020

 

Basis

Points Change

Segment operating margin:

 

 

 

 

 

 

 

 

 

 

 

Innerwear

21.0

%

 

21.7

%

 

(69

)

 

22.5

%

 

24.2

%

 

(170

)

Activewear

16.5

 

 

9.1

 

 

737

 

14.4

 

 

4.1

 

 

1,036

International

16.1

 

 

20.0

 

 

(386

)

 

15.5

 

 

13.2

 

 

224

 

Other

12.8

 

 

4.5

 

 

834

 

 

9.2

 

 

(7.6

)

 

1,683

 

General corporate expenses/other

(3.2

)

 

(3.8

)

 

57

 

 

(3.7

)

 

(4.2

)

 

49

 

Total operating margin before restructuring and other action-related charges

14.7

 

 

14.3

 

 

47

 

 

14.0

 

 

12.3

 

 

170

 

Restructuring and other action-related charges

(1.6

)

 

(3.1

)

 

146

 

 

(1.3

)

 

(2.5

)

 

112

 

Total operating margin

13.1

%

 

11.2

%

 

194

 

 

12.7

%

 

9.9

%

 

282

 

 

TABLE 3-B

HANESBRANDS INC.

Supplemental Financial Information

By Business Segment

(in thousands)

(Unaudited)

 

 

Quarters Ended

 

 

 

Nine Months Ended

 

 

 

October 2,

2021

 

September 28,

2019

Rebased1

 

% Change

 

October 2,

2021

 

September 28,

2019

Rebased1

 

% Change

Segment net sales:

 

 

 

 

 

 

 

 

 

 

 

Innerwear

$

702,617

 

 

 

$

562,285

 

 

 

25.0

%

 

$

2,053,702

 

 

 

$

1,686,176

 

 

 

21.8

%

Activewear

462,499

 

 

 

445,587

 

 

 

3.8

 

 

1,230,691

 

 

 

1,117,048

 

 

 

10.2

 

International

536,483

 

 

 

513,382

 

 

 

4.5

 

 

1,521,667

 

 

 

1,435,030

 

 

 

6.0

 

Other

87,952

 

 

 

89,356

 

 

 

(1.6

)

 

242,831

 

 

 

245,938

 

 

 

(1.3

)

Total net sales

$

1,789,551

 

 

 

$

1,610,610

 

 

 

11.1

%

 

$

5,048,891

 

 

 

$

4,484,192

 

 

 

12.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit:

 

 

 

 

 

 

 

 

 

 

 

Innerwear

$

147,651

 

 

 

$

117,771

 

 

 

25.4

%

 

$

461,237

 

 

 

$

367,894

 

 

 

25.4

%

Activewear

76,172

 

 

 

73,738

 

 

 

3.3

 

 

177,813

 

 

 

143,763

 

 

 

23.7

 

International

86,371

 

 

 

94,908

 

 

 

(9.0

)

 

235,451

 

 

 

246,174

 

 

 

(4.4

)

Other

11,288

 

 

 

12,898

 

 

 

(12.5

)

 

22,394

 

 

 

23,327

 

 

 

(4.0

)

General corporate expenses/other

(57,740

)

 

 

(55,566

)

 

 

3.9

 

 

(187,580

)

 

 

(190,683

)

 

 

(1.6

)

Total operating profit before restructuring and other action-related charges

263,742

 

 

 

243,749

 

 

 

8.2

 

 

709,315

 

 

 

590,475

 

 

 

20.1

 

Restructuring and other action-related charges

(29,096

)

 

 

(9,843

)

 

 

195.6

 

 

(67,153

)

 

 

(43,448

)

 

 

54.6

 

Total operating profit

$

234,646

 

 

 

$

233,906

 

 

 

0.3

%

 

$

642,162

 

 

 

$

547,027

 

 

 

17.4

%

 

 

Quarters Ended

 

 

 

Nine Months Ended

 

 

 

October 2,

2021

 

September 28,

2019

Rebased1

 

Basis Points

Change

 

October 2,

2021

 

September 28,

2019

Rebased1

 

Basis Points

Change

Segment operating margin:

 

 

 

 

 

 

 

 

 

 

 

Innerwear

21.0

%

 

20.9

%

 

7

 

 

22.5

%

 

21.8

%

 

64

Activewear

16.5

 

 

16.5

 

 

(8

)

 

14.4

 

 

12.9

 

 

158

International

16.1

 

 

18.5

 

 

(239

)

 

15.5

 

 

17.2

 

 

(168

)

Other

12.8

 

 

14.4

 

 

(160

)

 

9.2

 

 

9.5

 

 

(26

)

General corporate expenses/other

(3.2

)

 

(3.4

)

 

22

 

 

(3.7

)

 

(4.3

)

 

54

 

Total operating margin before restructuring and other action-related charges

14.7

 

 

15.1

 

 

(40

)

 

14.0

 

 

13.2

 

 

88

 

Restructuring and other action-related charges

(1.6

)

 

(0.6

)

 

(101

)

 

(1.3

)

 

(1.0

)

 

(36

)

Total operating margin

13.1

%

 

14.5

%

 

(141

)

 

12.7

%

 

12.2

%

 

52

 

1

Results for the quarter and nine months ended September 28, 2019 reflect adjustments for the exited C9 Champion mass program and DKNY intimate apparel license. See “Reconciliation of Select GAAP Measures to Non-GAAP Measures” in Tables 6-A through 6-E.

 

TABLE 4

HANESBRANDS INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

 

 

October 2,

2021

 

January 2,

2021

 

September 26,

2020

Assets

 

 

 

 

 

Cash and cash equivalents

$

873,628

 

 

 

$

900,615

 

 

 

$

716,921

 

 

Trade accounts receivable, net

928,039

 

 

 

768,221

 

 

 

921,434

 

 

Inventories

1,629,506

 

 

 

1,367,758

 

 

 

1,996,851

 

 

Other current assets

172,617

 

 

 

158,700

 

 

 

191,541

 

 

Current assets of discontinued operations

304,124

 

 

 

234,086

 

 

 

279,331

 

 

Total current assets

3,907,914

 

 

 

3,429,380

 

 

 

4,106,078

 

 

Property, net

440,804

 

 

 

477,821

 

 

 

484,939

 

 

Right-of-use assets

372,212

 

 

 

432,631

 

 

 

422,543

 

 

Trademarks and other identifiable intangibles, net

1,227,457

 

 

 

1,293,847

 

 

 

1,230,757

 

 

Goodwill

1,136,173

 

 

 

1,158,938

 

 

 

1,154,449

 

 

Deferred tax assets

327,196

 

 

 

367,976

 

 

 

193,015

 

 

Other noncurrent assets

51,049

 

 

 

64,773

 

 

 

93,849

 

 

Noncurrent assets of discontinued operations

 

 

 

494,501

 

 

 

482,911

 

 

Total assets

$

7,462,805

 

 

 

$

7,719,867

 

 

 

$

8,168,541

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Accounts payable

$

1,239,960

 

 

 

$

891,868

 

 

 

$

1,088,556

 

 

Accrued liabilities

718,545

 

 

 

609,864

 

 

 

590,778

 

 

Lease liabilities

122,545

 

 

 

136,510

 

 

 

143,753

 

 

Notes payable

 

 

 

 

 

 

11

 

 

Current portion of long-term debt

37,500

 

 

 

263,936

 

 

 

 

 

Current liabilities of discontinued operations

299,498

 

 

 

222,183

 

 

 

208,506

 

 

Total current liabilities

2,418,048

 

 

 

2,124,361

 

 

 

2,031,604

 

 

Long-term debt

3,626,547

 

 

 

3,739,434

 

 

 

3,972,212

 

 

Lease liabilities - noncurrent

276,595

 

 

 

331,577

 

 

 

317,834

 

 

Pension and postretirement benefits

321,323

 

 

 

381,457

 

 

 

324,683

 

 

Other noncurrent liabilities

183,723

 

 

 

216,091

 

 

 

256,238

 

 

Noncurrent liabilities of discontinued operations

 

 

 

112,989

 

 

 

116,437

 

 

Total liabilities

6,826,236

 

 

 

6,905,909

 

 

 

7,019,008

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

Common stock

3,492

 

 

 

3,488

 

 

 

3,483

 

 

Additional paid-in capital

316,112

 

 

 

307,883

 

 

 

306,157

 

 

Retained earnings

928,293

 

 

 

1,069,546

 

 

 

1,454,676

 

 

Accumulated other comprehensive loss

(611,328

)

 

 

(566,959

)

 

 

(614,783

)

 

Total stockholders’ equity

636,569

 

 

 

813,958

 

 

 

1,149,533

 

 

Total liabilities and stockholders’ equity

$

7,462,805

 

 

 

$

7,719,867

 

 

 

$

8,168,541

 

 

 

TABLE 5

HANESBRANDS INC.

Condensed Consolidated Statements of Cash Flows1

(in thousands)

(Unaudited)

 

 

Quarters Ended

 

Nine Months Ended

 

October 2,

2021

 

September 26,

2020

 

October 2,

2021

 

September 26,

2020

Operating Activities:

 

 

 

 

 

 

 

Net income

$

151,777

 

 

 

$

103,278

 

 

 

$

17,191

 

 

 

$

256,585

 

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

 

 

Depreciation

19,618

 

 

 

22,277

 

 

 

63,183

 

 

 

67,676

 

 

Amortization of acquisition intangibles

4,718

 

 

 

6,304

 

 

 

15,696

 

 

 

18,503

 

 

Other amortization

2,796

 

 

 

2,984

 

 

 

8,610

 

 

 

8,091

 

 

Impairment of intangible assets and goodwill

 

 

 

 

 

 

163,047

 

 

 

20,319

 

 

Loss on classification of assets held for sale

30,562

 

 

 

 

 

 

266,742

 

 

 

 

 

Amortization of debt issuance costs

2,581

 

 

 

3,184

 

 

 

10,250

 

 

 

8,303

 

 

Other

12,336

 

 

 

9,411

 

 

 

(1,888

)

 

 

25,658

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

(1,819

)

 

 

216,255

 

 

 

(201,925

)

 

 

(175,879

)

 

Inventories

(117,316

)

 

 

(197,958

)

 

 

(292,465

)

 

 

(259,367

)

 

Other assets

2,591

 

 

 

(11,789

)

 

 

7,042

 

 

 

(43,359

)

 

Accounts payable

90,716

 

 

 

(20,772

)

 

 

391,034

 

 

 

189,566

 

 

Accrued pension and postretirement benefits

(1,292

)

 

 

353

 

 

 

(40,468

)

 

 

(18,965

)

 

Accrued liabilities and other

117,852

 

 

 

115,488

 

 

 

121,327

 

 

 

134,091

 

 

Net cash from operating activities

315,120

 

 

 

249,015

 

 

 

527,376

 

 

 

231,222

 

 

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

 

Capital expenditures

(29,989

)

 

 

(2,521

)

 

 

(55,320

)

 

 

(49,033

)

 

Proceeds from sales of assets

24

 

 

 

265

 

 

 

2,479

 

 

 

331

 

 

Other

1,500

 

 

 

1,795

 

 

 

8,437

 

 

 

7,618

 

 

Net cash from investing activities

(28,465

)

 

 

(461

)

 

 

(44,404

)

 

 

(41,084

)

 

 

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

 

Repayments on Term Loan Facilities

(9,375

)

 

 

 

 

 

(315,625

)

 

 

 

 

Borrowings on Accounts Receivable Securitization Facility

 

 

 

 

 

 

 

 

 

227,061

 

 

Repayments on Accounts Receivable Securitization Facility

 

 

 

 

 

 

 

 

 

(227,061

)

 

Borrowings on Revolving Loan Facilities

 

 

 

 

 

 

 

 

 

1,638,000

 

 

Repayments on Revolving Loan Facilities

 

 

 

(118,189

)

 

 

 

 

 

(1,756,189

)

 

Borrowings on Senior Notes

 

 

 

 

 

 

 

 

 

700,000

 

 

Borrowings on International Debt

 

 

 

 

 

 

 

 

 

31,222

 

 

Repayments on International Debt

 

 

 

(36,383

)

 

 

 

 

 

(36,383

)

 

Borrowings on notes payable

66,759

 

 

 

49,889

 

 

 

109,397

 

 

 

166,558

 

 

Repayments on notes payable

(66,531

)

 

 

(53,735

)

 

 

(109,597

)

 

 

(166,108

)

 

Share repurchases

 

 

 

 

 

 

 

 

 

(200,269

)

 

Cash dividends paid

(52,380

)

 

 

(52,236

)

 

 

(157,099

)

 

 

(158,132

)

 

Other

(476

)

 

 

(1,223

)

 

 

(3,000

)

 

 

(15,258

)

 

Net cash from financing activities

(62,003

)

 

 

(211,877

)

 

 

(475,924

)

 

 

203,441

 

 

Effect of changes in foreign exchange rates on cash

(10,427

)

 

 

11,721

 

 

 

(27,207

)

 

 

9,052

 

 

Change in cash, cash equivalents and restricted cash

214,225

 

 

 

48,398

 

 

 

(20,159

)

 

 

402,631

 

 

Cash, cash equivalents and restricted cash at beginning of period

676,219

 

 

 

684,156

 

 

 

910,603

 

 

 

329,923

 

 

Cash, cash equivalents and restricted cash at end of period

890,444

 

 

 

732,554

 

 

 

890,444

 

 

 

732,554

 

 

Less restricted cash at end of period

 

 

 

1,073

 

 

 

 

 

 

1,073

 

 

Cash and cash equivalents at end of period

$

890,444

 

 

 

$

731,481

 

 

 

$

890,444

 

 

 

$

731,481

 

 

 

 

 

 

 

 

 

 

Balances included in the Condensed Consolidated Balance Sheets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

873,628

 

 

 

$

716,921

 

 

 

$

873,628

 

 

 

$

716,921

 

 

Cash and cash equivalents included in current assets of discontinued operations

16,816

 

 

 

14,560

 

 

 

16,816

 

 

 

14,560

 

 

Cash and cash equivalents at end of period

$

890,444

 

 

 

$

731,481

 

 

 

$

890,444

 

 

 

$

731,481

 

 

1

The cash flows related to discontinued operations have not been segregated and remain included in the major classes of assets and liabilities. Accordingly, the Condensed Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.

 

TABLE 6-A

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended October 2, 2021

 

Gross Profit

 

Selling, General

and

Administrative

Expenses

 

Operating

Profit

 

Income

From

Continuing

Operations

Before

Income Tax

Expense

 

Income Tax

Expense

 

Income

From

Continuing

Operations

 

Diluted

Earnings Per

Share From

Continuing

Operations1

As reported

$

699,661

 

 

$

(465,015

)

 

$

234,646

 

 

$

191,975

 

 

$

(15,228

)

 

 

$

176,747

 

 

 

$

0.50

 

 

As a percentage of net sales

39.1

%

 

26.0

%

 

13.1

%

 

 

 

 

 

 

 

 

Restructuring and other action-related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Potential Plan:

 

 

 

 

 

 

 

 

 

 

 

 

 

Professional services

 

 

11,283

 

 

11,283

 

 

11,283

 

 

 

 

 

11,283

 

 

 

0.03

 

 

Operating model

 

 

16,000

 

 

16,000

 

 

16,000

 

 

 

 

 

16,000

 

 

 

0.05

 

 

Other

(108

)

 

1,921

 

 

1,813

 

 

1,813

 

 

 

 

 

1,813

 

 

 

0.01

 

 

Discrete tax benefits

 

 

 

 

 

 

 

 

(11,802

)

 

 

(11,802

)

 

 

(0.03

)

 

Tax effect on actions

 

 

 

 

 

 

 

 

(6,131

)

 

 

(6,131

)

 

 

(0.02

)

 

Total restructuring and other action-related charges

(108

)

 

29,204

 

 

29,096

 

 

29,096

 

 

(17,933

)

 

 

11,163

 

 

 

0.03

 

 

As adjusted

$

699,553

 

 

$

(435,811

)

 

$

263,742

 

 

$

221,071

 

 

$

(33,161

)

 

 

$

187,910

 

 

 

$

0.53

 

 

As a percentage of net sales

39.1

%

 

24.4

%

 

14.7

%

 

 

 

 

 

 

 

 

 

Nine Months Ended October 2, 2021

 

Gross Profit

 

Selling, General

and

Administrative

Expenses

 

Operating

Profit

 

Income

From

Continuing

Operations

Before

Income Tax

Expense

 

Income Tax

Expense

 

Income

From

Continuing

Operations

 

Diluted

Earnings Per

Share From

Continuing

Operations1

As reported

$

1,983,971

 

 

$

(1,341,809

)

 

$

642,162

 

 

$

508,175

 

 

$

(55,161

)

 

 

$

453,014

 

 

 

$

1.29

 

 

As a percentage of net sales

39.3

%

 

26.6

%

 

12.7

%

 

 

 

 

 

 

 

 

Restructuring and other action-related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Potential Plan:

 

 

 

 

 

 

 

 

 

 

 

 

 

Professional services

 

 

36,793

 

 

36,793

 

 

36,793

 

 

 

 

 

36,793

 

 

 

0.10

 

 

Operating model

 

 

17,600

 

 

17,600

 

 

17,600

 

 

 

 

 

17,600

 

 

 

0.05

 

 

Impairment of intangible assets

 

 

7,302

 

 

7,302

 

 

7,302

 

 

 

 

 

7,302

 

 

 

0.02

 

 

Other

4,599

 

 

859

 

 

5,458

 

 

5,458

 

 

 

 

 

5,458

 

 

 

0.02

 

 

Discrete tax benefits

 

 

 

 

 

 

 

 

(19,097

)

 

 

(19,097

)

 

 

(0.05

)

 

Tax effect on actions

 

 

 

 

 

 

 

 

(12,041

)

 

 

(12,041

)

 

 

(0.03

)

 

Total restructuring and other action-related charges

4,599

 

 

62,554

 

 

67,153

 

 

67,153

 

 

(31,138

)

 

 

36,015

 

 

 

0.10

 

 

As adjusted

$

1,988,570

 

 

$

(1,279,255

)

 

$

709,315

 

 

$

575,328

 

 

$

(86,299

)

 

 

$

489,029

 

 

 

$

1.39

 

 

As a percentage of net sales

39.4

%

 

25.3

%

 

14.0

%

 

 

 

 

 

 

 

 

1

Amounts may not be additive due to rounding.

Including the favorable foreign currency impact of $1 million, global Champion sales excluding C9 Champion increased approximately 33% in the third quarter of 2021 compared to the third quarter of 2020. On a constant currency basis, global Champion sales excluding C9 Champion increased approximately 33% in the third quarter of 2021 compared to the third quarter of 2020.

 

Including the favorable foreign currency impact of $9 million, global Champion sales excluding C9 Champion increased approximately 20% in the third quarter of 2021 compared to the third quarter of 2019. On a constant currency basis, global Champion sales excluding C9 Champion increased approximately 19% in the third quarter of 2021 compared to the third quarter of 2019.

TABLE 6-B

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended September 26, 2020

 

Gross Profit

 

Selling, General

and

Administrative

Expenses

 

Operating

Profit

 

Income

From

Continuing

Operations

Before

Income Tax

Expense

 

Income Tax

Expense

 

Income

From

Continuing

Operations

 

Diluted

Earnings Per

Share From

Continuing

Operations1

As reported

$

571,471

 

 

$

(382,384

)

 

$

189,087

 

 

$

140,689

 

 

$

(22,464

)

 

 

$

118,225

 

 

 

$

0.34

 

 

As a percentage of net sales

33.8

%

 

22.6

%

 

11.2

%

 

 

 

 

 

 

 

 

Restructuring and other action-related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply chain actions

2,098

 

 

 

 

2,098

 

 

2,098

 

 

 

 

 

2,098

 

 

 

0.01

 

 

Program exit costs

356

 

 

 

 

356

 

 

356

 

 

 

 

 

356

 

 

 

0.00

 

 

Other

(4

)

 

1,199

 

 

1,195

 

 

1,195

 

 

 

 

 

1,195

 

 

 

0.00

 

 

COVID-19 related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply chain re-startup

45,149

 

 

3,459

 

 

48,608

 

 

48,608

 

 

 

 

 

48,608

 

 

 

0.14

 

 

Discrete tax benefits

 

 

 

 

 

 

 

 

(3,113

)

 

 

(3,113

)

 

 

(0.01

)

 

Tax effect on actions

 

 

 

 

 

 

 

 

(7,360

)

 

 

(7,360

)

 

 

(0.02

)

 

Total restructuring and other action-related charges

47,599

 

 

4,658

 

 

52,257

 

 

52,257

 

 

(10,473

)

 

 

41,784

 

 

 

0.12

 

 

As adjusted

$

619,070

 

 

$

(377,726

)

 

$

241,344

 

 

$

192,946

 

 

$

(32,937

)

 

 

$

160,009

 

 

 

$

0.46

 

 

As a percentage of net sales

36.6

%

 

22.3

%

 

14.3

%

 

 

 

 

 

 

 

 

 

Nine Months Ended September 26, 2020

 

Gross Profit

 

Selling, General

and

Administrative

Expenses

 

Operating

Profit

 

Income

From

Continuing

Operations

Before

Income Tax

Expense

 

Income Tax

Expense

 

Income

From

Continuing

Operations

 

Diluted

Earnings Per

Share From

Continuing

Operations1

As reported

$

1,503,501

 

 

$

(1,064,328

)

 

$

439,173

 

 

$

302,919

 

 

$

(43,008

)

 

 

$

259,911

 

 

 

$

0.73

 

 

As a percentage of net sales

33.9

%

 

24.0

%

 

9.9

%

 

 

 

 

 

 

 

 

Restructuring and other action-related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply chain actions

18,800

 

 

 

 

18,800

 

 

18,800

 

 

 

 

 

18,800

 

 

 

0.05

 

 

Program exit costs

9,387

 

 

467

 

 

9,854

 

 

9,854

 

 

 

 

 

9,854

 

 

 

0.03

 

 

Other

(377

)

 

7,688

 

 

7,311

 

 

7,311

 

 

 

 

 

7,311

 

 

 

0.02

 

 

COVID-19 related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply chain re-startup

45,149

 

 

3,459

 

 

48,608

 

 

48,608

 

 

 

 

 

48,608

 

 

 

0.14

 

 

Bad debt

 

 

9,418

 

 

9,418

 

 

9,418

 

 

 

 

 

9,418

 

 

 

0.03

 

 

Inventory

14,869

 

 

 

 

14,869

 

 

14,869

 

 

 

 

 

14,869

 

 

 

0.04

 

 

Discrete tax benefits

 

 

 

 

 

 

 

 

(3,113

)

 

 

(3,113

)

 

 

(0.01

)

 

Tax effect on actions

 

 

 

 

 

 

 

 

(17,581

)

 

 

(17,581

)

 

 

(0.05

)

 

Total restructuring and other action-related

charges

87,828

 

 

21,032

 

 

108,860

 

 

108,860

 

 

(20,694

)

 

 

88,166

 

 

 

0.25

 

 

As adjusted

$

1,591,329

 

 

$

(1,043,296

)

 

$

548,033

 

 

$

411,779

 

 

$

(63,702

)

 

 

$

348,077

 

 

 

$

0.98

 

 

As a percentage of net sales

35.9

%

 

23.5

%

 

12.3

%

 

 

 

 

 

 

 

 

1

Amounts may not be additive due to rounding.

 

TABLE 6-C

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended September 28, 2019

 

Net Sales

 

Gross Profit

 

Selling,

General

and

Administrative

Expenses

 

Operating

Profit

 

Income

From

Continuing

Operations

Before

Income Tax

Expense

 

Income

Tax Expense

 

Income

From

Continuing

Operations

 

Diluted

Earnings Per

Share From

Continuing

Operations1

As reported

$

1,729,308

 

 

 

$

646,469

 

 

$

(385,291

)

 

$

261,178

 

 

$

211,134

 

 

 

$

(22,129

)

 

 

$

189,005

 

 

 

$

0.52

 

 

Less exited programs2

(118,698

)

 

 

(36,290

)

 

9,018

 

 

(27,272

)

 

(27,272

)

 

 

3,848

 

 

 

(23,424

)

 

 

(0.06

)

 

As rebased

1,610,610

 

 

 

610,179

 

 

(376,273

)

 

233,906

 

 

183,862

 

 

 

(18,281

)

 

 

165,581

 

 

 

0.45

 

 

As a percentage of net sales

 

 

37.9

%

 

23.4

%

 

14.5

%

 

 

 

 

 

 

 

 

Restructuring and other action-related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply chain actions

 

 

 

9,308

 

 

 

 

9,308

 

 

9,308

 

 

 

 

 

 

9,308

 

 

 

0.03

 

 

Other

 

 

 

 

 

535

 

 

535

 

 

535

 

 

 

 

 

 

535

 

 

 

0.00

 

 

Tax effect on actions

 

 

 

 

 

 

 

 

 

 

 

 

(1,389

)

 

 

(1,389

)

 

 

0.00

 

 

Total restructuring and other action-related charges

 

 

 

9,308

 

 

535

 

 

9,843

 

 

9,843

 

 

 

(1,389

)

 

 

8,454

 

 

 

0.02

 

 

As adjusted

$

1,610,610

 

 

 

$

619,487

 

 

$

(375,738

)

 

$

243,749

 

 

$

193,705

 

 

 

$

(19,670

)

 

 

$

174,035

 

 

 

$

0.48

 

 

As a percentage of net sales

 

 

38.5

%

 

23.3

%

 

15.1

%

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 28, 2019

 

Net Sales

 

Gross Profit

 

Selling, General

and

Administrative

Expenses

 

Operating

Profit

 

Income

From

Continuing

Operations

Before

Income Tax

Expense

 

Income

Tax Expense

 

Income

From

Continuing

Operations

 

Diluted

Earnings Per

Share From

Continuing

Operations1

As reported

$

4,815,704

 

 

 

$

1,795,573

 

 

$

(1,174,894

)

 

$

620,679

 

 

$

461,418

 

 

 

$

(46,708

)

 

 

$

414,710

 

 

 

$

1.13

 

 

Less exited programs2

(331,512

)

 

 

(101,347

)

 

27,695

 

 

(73,652

)

 

(73,652

)

 

 

10,388

 

 

 

(63,264

)

 

 

(0.17

)

 

As rebased

4,484,192

 

 

 

1,694,226

 

 

(1,147,199

)

 

547,027

 

 

387,766

 

 

 

(36,320

)

 

 

351,446

 

 

 

0.96

 

 

As a percentage of net sales

 

 

37.8

%

 

25.6

%

 

12.2

%

 

 

 

 

 

 

 

 

Restructuring and other action-related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply chain actions

 

 

 

39,210

 

 

 

 

39,210

 

 

39,210

 

 

 

 

 

 

39,210

 

 

 

0.11

 

 

Other

 

 

 

 

 

4,238

 

 

4,238

 

 

4,238

 

 

 

 

 

 

4,238

 

 

 

0.01

 

 

Tax effect on actions

 

 

 

 

 

 

 

 

 

 

 

 

(6,127

)

 

 

(6,127

)

 

 

(0.02

)

 

Total restructuring and other action-related charges

 

 

 

39,210

 

 

4,238

 

 

43,448

 

 

43,448

 

 

 

(6,127

)

 

 

37,321

 

 

 

0.10

 

 

As adjusted

$

4,484,192

 

 

 

$

1,733,436

 

 

$

(1,142,961

)

 

$

590,475

 

 

$

431,214

 

 

 

$

(42,447

)

 

 

$

388,767

 

 

 

$

1.06

 

 

As a percentage of net sales

 

 

38.7

%

 

25.5

%

 

13.2

%

 

 

 

 

 

 

 

 

1

Amounts may not be additive due to rounding.

2

Includes the results for the exited C9 Champion mass program and the DKNY intimate apparel license.

 

TABLE 6-D

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended September 28, 2019

 

As Reported

 

Less: Exited Programs1

 

Adjusted for Exited Programs

 

Less: Restructuring and other action-related charges

 

Rebased

Segment net sales:

 

 

 

 

 

 

 

 

 

Innerwear

$

578,453

 

 

 

$

16,168

 

 

$

562,285

 

 

 

$

 

 

 

$

562,285

 

 

Activewear

548,117

 

 

 

102,530

 

 

445,587

 

 

 

 

 

 

445,587

 

 

International

513,382

 

 

 

 

 

513,382

 

 

 

 

 

 

513,382

 

 

Other

89,356

 

 

 

 

 

89,356

 

 

 

 

 

 

89,356

 

 

Total net sales

$

1,729,308

 

 

 

$

118,698

 

 

$

1,610,610

 

 

 

$

 

 

 

$

1,610,610

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit:

 

 

 

 

 

 

 

 

 

Innerwear

$

121,467

 

 

 

$

3,696

 

 

$

117,771

 

 

 

$

 

 

 

$

117,771

 

 

Activewear

97,314

 

 

 

23,576

 

 

73,738

 

 

 

 

 

 

73,738

 

 

International

94,908

 

 

 

 

 

94,908

 

 

 

 

 

 

94,908

 

 

Other

12,898

 

 

 

 

 

12,898

 

 

 

 

 

 

12,898

 

 

General corporate expenses/other

(55,566

)

 

 

 

 

(55,566

)

 

 

 

 

 

(55,566

)

 

Restructuring and other action-related charges

(9,843

)

 

 

 

 

(9,843

)

 

 

(9,843

)

 

 

 

 

Total operating profit

$

261,178

 

 

 

$

27,272

 

 

$

233,906

 

 

 

$

(9,843

)

 

 

$

243,749

 

 

 

Nine Months Ended September 28, 2019

 

As Reported

 

Less: Exited Programs1

 

Adjusted for Exited Programs

 

Less: Restructuring and other action-related charges

 

Rebased

Segment net sales:

 

 

 

 

 

 

 

 

 

Innerwear

$

1,733,002

 

 

 

$

46,826

 

 

$

1,686,176

 

 

 

$

 

 

 

$

1,686,176

 

 

Activewear

1,401,734

 

 

 

284,686

 

 

1,117,048

 

 

 

 

 

 

1,117,048

 

 

International

1,435,030

 

 

 

 

 

1,435,030

 

 

 

 

 

 

1,435,030

 

 

Other

245,938

 

 

 

 

 

245,938

 

 

 

 

 

 

245,938

 

 

Total net sales

$

4,815,704

 

 

 

$

331,512

 

 

$

4,484,192

 

 

 

$

 

 

 

$

4,484,192

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit:

 

 

 

 

 

 

 

 

 

Innerwear

$

375,623

 

 

 

$

7,729

 

 

$

367,894

 

 

 

$

 

 

 

$

367,894

 

 

Activewear

209,686

 

 

 

65,923

 

 

143,763

 

 

 

 

 

 

143,763

 

 

International

246,174

 

 

 

 

 

246,174

 

 

 

 

 

 

246,174

 

 

Other

23,327

 

 

 

 

 

23,327

 

 

 

 

 

 

23,327

 

 

General corporate expenses/other

(190,683

)

 

 

 

 

(190,683

)

 

 

 

 

 

(190,683

)

 

Restructuring and other action-related charges

(43,448

)

 

 

 

 

(43,448

)

 

 

(43,448

)

 

 

 

 

Total operating profit

$

620,679

 

 

 

$

73,652

 

 

$

547,027

 

 

 

$

(43,448

)

 

 

$

590,475

 

 

1

Includes the results for the exited C9 Champion mass program and the DKNY intimate apparel license.

 

TABLE 6-E

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

 

Last Twelve Months

 

October 2,

2021

 

September 26,

2020

EBITDA1:

 

 

 

Income from continuing operations

$

160,816

 

 

 

$

418,525

 

 

Interest expense, net

171,396

 

 

 

161,155

 

 

Income tax expense (benefit)

(97,787

)

 

 

66,536

 

 

Depreciation and amortization

116,145

 

 

 

111,336

 

 

Total EBITDA

350,570

 

 

 

757,552

 

 

Total restructuring and other action-related charges (excluding tax effect on actions)

692,489

 

 

 

127,927

 

 

Stock compensation expense

15,017

 

 

 

13,813

 

 

Total EBITDA, as adjusted

$

1,058,076

 

 

 

$

899,292

 

 

 

 

 

 

Net debt:

 

 

 

Debt (current and long-term debt)

$

3,664,047

 

 

 

$

3,972,212

 

 

Notes payable

 

 

 

11

 

 

(Less) Cash and cash equivalents

(873,628

)

 

 

(716,921

)

 

Net debt

$

2,790,419

 

 

 

$

3,255,302

 

 

 

 

 

 

Net debt/EBITDA, as adjusted

2.6

 

 

 

3.6

 

 

1

Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure.

 

 

Quarters Ended

 

Nine Months Ended

 

October 2,

2021

 

September 26,

2020

 

October 2,

2021

 

September 26,

2020

Free cash flow1:

 

 

 

 

 

 

 

Net cash from operating activities

$

315,120

 

 

 

$

249,015

 

 

 

$

527,376

 

 

 

$

231,222

 

 

Capital expenditures

(29,989

)

 

 

(2,521

)

 

 

(55,320

)

 

 

(49,033

)

 

Free cash flow

$

285,131

 

 

 

$

246,494

 

 

 

$

472,056

 

 

 

$

182,189

 

 

1

Free cash flow includes the results from continuing and discontinued operations.

 

TABLE 7

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of GAAP Outlook to Adjusted Outlook

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended

 

Year Ended

 

January 1,

2022

 

January 1,

2022

Operating profit outlook, as calculated under GAAP

$182,000 to $202,000

 

$825,000 to $845,000

Restructuring and other action-related charges

$18,000

 

$85,000

Operating profit outlook, as adjusted

$200,000 to $220,000

 

$910,000 to $930,000

 

 

 

 

Diluted earnings per share from continuing operations, as calculated under GAAP1

$0.24 to $0.29

 

$1.53 to $1.58

Restructuring and other action-related charges

$0.16

 

$0.26

Diluted earnings per share from continuing operations, as adjusted

$0.40 to $0.45

 

$1.79 to $1.84

1

The company expects approximately 353 million diluted weighted average shares outstanding for the quarter ended January 1, 2022 and approximately 352 million diluted weighted average shares outstanding for the year ended January 1, 2022.

 

Contacts

News Media contact: Kirk Saville (336) 979-7293

Analysts and Investors contact: T.C. Robillard (336) 519-2115

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